Retail sales fell in January due to winter weather, post-holiday shopping patterns

As the weather got colder, US consumers cooled their jets after the holidays: Retail sales fell 0.8% in January from the previous month, according to Commerce Department data.

It’s the biggest drop since March of last year, but economists said it’s not as bad as it looks.

Nationwide Chief Economist Kathy Bostjancic wrote in a research brief that “seasonal factors and inclement weather exaggerated” the decline, and that some slowdown in spending was expected due to macroeconomic factors.

“We have expected consumers to reign in their spending this year after drawing down the pandemic-related savings, driving the savings rate well below its pre-pandemic levels, and increasing their reliance on credit,” she wrote.

Back to basics: Nonessential purchasing continues to decline, according to new data from Circana. The research firm found that dollar and unit sales of discretionary general merchandise fell 5% in the four weeks ending January 27, compared to a year before.

“The absence of growth in nonessential purchasing remains with the continued lack of innovation, impulse purchases and seasonal spending,” Marshal Cohen, chief retail advisor for Circana, said.

Cohen elaborated on this argument in a blog post, writing that “consumers need an incentive to purchase. The creation of new and exciting products is the first component that has to return to the retail picture.”

Keeping up with consumers: In the meantime, some retailers are focused on offering more of the affordable options that consumers are prioritizing.

On Thursday, Target introduced a new low-priced private-label brand, Dealworthy, with prices “starting at less than $1” on “nearly 400 everyday basics.” This comes just a few days after Target announced a relaunch of its popular up&up brand.